Early Market activity augers well

Since the beginning of COVID-19 in March we have expectedly seen a sharp decline in listings, in particular in the inner suburb family house market. This shortage has resulted in in values broadly staying steady and any price falls in the inner city generally only being in the 5-10% range. 

The development market has seen tight restrictions and presale requirements for major lenders. Presales “off the plan” are currently difficult to secure and the construction finance space in now dominated by non bank lenders, many at circa 10% interest rates with 1.5% of the loan amount in application fees. 

Reliable data of non bank lending is currently not available. Several new multi unit developments which sold off the plan between 2016 to 2018 and now settling with bank valuations coming in as much as 20% under contract- it is noted these reductions generally are in the sub $1m space. We foresee capital growth on new apartments in large developments (which is not our buyer profile) is unlikely in the next 2 year period.

Core Logic early market indicators show a positive trajectory for prelisting activity, in fact, prelist activity has resumed to the same level as this time last year. Pre List activity is the use of core logics CMA reports, used directly by agents for the use of market appraisals prior to listing. This together with the positive increase in listings and agent sentiment auger well for a future buyers market. This coming spring is shaping up to be a positive time to purchase with new stock coming onto the market and government stimulus easing. A potential softening in the market during Spring due to the factors mentioned and reinforced by supply exceeding demand could be reasonably expected, with a potential anticipated stabilisation in 2021 and general market capital growth from 2022. Finance to house/apartment purchasers is also difficult with banks assessing peoples occupations and the effects of COVID-19 to their vocation. 

Non-bank residential mortgage lending is estimated to have grown roughly 15% per annum over recent years, well above growth in lending by banks. Increasing choice for buyers and possible encouragement to buy. The below graph shows the increase in the non bank lending space in the general housing market between 2017 to 2019: 

Only as good as our last client 

At Davidson Property Advocates we provide solutions, coupled with outstanding results. Our determination to help buyers rise above any problem has never been greater. We have access to what will soon be a sharply increasing portfolio of off-market properties.

Our relationships built over decades open the door to this ever-growing secondary market. They translate to "priority qualification" ensuring you get prime physical entry through us. 

We invite you to engage with CEO Tonya Davidson to discuss how we can solve your property challenges whilst at the same time achieving your property goals.